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Summary

  1. FTSE closes lower after record mid-session high on Tuesday
  2. Pound rises back above $1.22 and €1.11
  3. Lloyds bank to cut 1,230 jobs
  4. Monarch keeps licence after £165m injection
  5. Samsung warns on profits after Note 7 pulled

Live Reporting

By Russell Hotten

All times stated are UK

Get involved

That's all from today's live page. We are off to stock up on Marmite in case it runs out.

Night, night.

Tesco vs Unilever: mutual dependency means a deal will be found

Emma Simpson

Business correspondent, BBC News

Pots of Pot Noodle
Tesco

Who should absorb the increase in costs as a result of the weaker pound? It’s the question that retailers have consistently been asked these last few months as import prices start to rise. 

Now this debate has exploded into the open with a stand-off between Britain’s biggest consumer goods company and its largest retailer, Tesco. Household staples, from Ben & Jerry’s ice cream and Pot Noodles, to Persil and Dove soap, are at stake. The extra spice to this story is that Tesco’s boss, Dave Lewis, spent most of his career at Unilever before being poached by Tesco. 

In the cut-throat world of grocery shopping, retailers are reluctant to pass on price rises to shoppers. But many suppliers are already seeing input costs rise because of the fall in the pound, although many will also have hedged their currency positions until at least the start of next year. 

So who ultimately takes the hit? One grocery insider says in the case of Unilever, the weak currency was a smokescreen to raise prices, as some of the products are made in the UK. Whatever the truth, this relationship is too important for the two sides not to reach a deal in the end.

Will the other big grocers follow suit?

Ice cream prices will rise, warns Unilever boss - before Brexit vote

Here's what the maker of Ben & Jerry's told Channel 4 News before June's referendum

Tesco: a wider problem

Tesco in dispute with Unilever over prices

Leading retail analyst Richard Hyman tells the BBC: "This shines a light on something that is going to be happening all the time. The problem is that retailers can't just put up their prices and get away with it.

"Over-supply of retailers means that for the past 24 months there has been food-price deflation. What makes them think they can just push prices higher?"

Silver lining? Probably not

Resolution Group head of research tweets:

And it other news...

Away from the Tesco story for a moment

Skyline of the City of London
Reuters

The still-tarnished image of City bankers may queer the pitch for the UK's Brexit negotiations, especially in relation to the financial services industry.

Says who? Says John McFarlane, who leads the lobby group TheCityUK. 

He told the Reuters news agency: "The financial services industry has not covered itself in glory. I will use the words "potentially politically toxic" in some of its aspect."

"The government is in a difficult position... coming out wearing on your sleeves 'we've got to save the financial services industry', is not politically smart" he added.

Poacher turned gamekeeper

Sky News senior political correspondent tweets:

Battle of the brands

Ben & Jerry's ice cream tubs
Tesco

It's still not entirely clear if Tesco is running low of Unilever products because there have been no deliveries, or if Britain's biggest supermarket has taken some off the shelves.

But it's not just in-store items that are affected. Brands including Marmite, Surf washing powder and Comfort fabric conditioner, mayonnaise maker Hellmann's, Pot Noodle and Ben & Jerry's Ice Cream are not available to buy on Tesco's website.

To re-cap: There are widespread reports that Unilever wants to increase prices because the fall in the value of sterling has increased its costs. Tesco, like all supermarkets, is under intense pressure to keep costs down. Tesco will only say it has "availability issues". Unilever has yet to comment.

What does the Fed think?

The financial world's most tedious guessing game rumbles on. When will the US central bank - the Federal Reserve - raise interest rates?

According to minutes of the Fed's September meeting (when nothing changed) some Fed members are leaning in favour of a rise soon.

"Several members judged that it would be appropriate to increase the target range for the federal funds rate relatively soon if economic developments unfolded... as expected."  

By which they mean, if the US economy keeps on growing and employment keeps on rising.

Shoppers warned of price increases

Former Sainsbury's boss Justin King
Getty Images

The former boss of Sainsbury's is warning shoppers to expect higher prices. Justin King says supermarkets won't be able to absorb the extra cost of imported goods caused by the plummeting value of the pound.

According to a Guardian report of a conference speech by Mr King, he said: “Retailers’ margins are already squeezed. So there is no room to absorb input price pressures and costs will need to be passed on.

"But no one wants to be the first to break cover. No business wants to be the first to blame Brexit for a rise in prices. But once someone does, there will be a flood of companies because they will all be suffering.”

However, the tensions created by the falling pound, down 20% against the dollar and 22% against the euro since June's Brexit vote, emerged earlier this evening.

Tesco appears to be in dispute with Unilever over a plan by the consumer products giant to raise prices. There are reports that Tesco has pulled some brands from its shelves. Tesco says only that it is "experiencing availability issues".

400 jobs to go following Ed’s Diner acqusition

Ed's Easy Diner
Ed's Easy Diner

Ranjit Boparan, the owner of Giraffe and other restaurant chains, has acquired Ed’s Easy Diner, saving the group from administration. 

The deal includes 33 of the chain’s restaurants, but the remaining 26 will close, resulting in around 400 job losses. 

Ed's was launched in London's Soho in 1987 and expanded rapidly during the last decade, growing from three outlets to 59. However, it has suffered weaker trading more recently and was put up for sale earlier this year.

The deal comes after Mr Boparan bought turkey producer Bernard Matthews last month.

Getting older - food for thought

Two old people
EPA

Tomorrow the former CBI boss John Cridland publishes his initial report after being asked by the government to review the state pension age. Should it keep on going up? 

The insurance firm Aviva draws our attention to some figures published earlier today by the Office for National Statistics (ONS).

These suggest that the percentage of the UK population aged 65 or over - currently 18% - will rise by just over a fifth between 2015 and 2025.

The biggest increase in this particular age group will be in London: up by a quarter.

Tesco vs Unilever: Hard bargaining

Battle of the brands over Unilever plan to raise prices

pot of Ben & Jerry's ice cream
Unilever

The Financial Times thinks Tesco may have been actually pulling Unilever products from its shelves, rather than just running out of stock.

Here's what analyst Bruno Monteyne, from Bernstein, tells the FT: “That’s the way you have to negotiate. You have to draw a line in the sand and say, ‘OK, we’re going to delist you.’”  

Although Tesco’s size gave it a strong negotiating position, the grocer would ultimately be forced to reach a compromise, he believes.

“Unilever is very big and Tesco can’t get around not working with them,” Mr Monteyne says. “Dave Lewis [Tesco's chief executive] might be wanting to show he’s not shying away from his former employer, but really, there’s much more at stake.”

FTSE 100: why it matters to you

The FTSE 100 has hit a record high but what is it and why does it matter? Our team of financial experts explains.

This clip is originally from Wake Up To Money on Wednesday 12 October 2016.

'Most banks not planning to quit London'

Treasury mandarin appears before select committee

Most banks are not making plans to leave London because of Brexit, permanent secretary at the Treasury Tom Scholar told a committee earlier. 

They are instead waiting to "see how the debate evolves".

But he accepted many were worried and some were making "noises" - as they should be - adding that the Treasury was in close contact with them all. 

"We will be very keen indeed to make sure that the final [Brexit] agreement gives the proper placer to financial services. It will have a high priority in our discussions," he said. 

You'll either like this or hate it

Marmite jars
Unilever

More on Tesco running low of some products...

If reports are true, Tesco's stock shortage of some Unilever brands is because of a dispute over prices following sterling's fall against the euro.

Apparently, Unilever wants to raise prices by around 10%. Tesco will only say that it is "experiencing availability issues". No word yet from Unilever.

Product shortages are said to include Marmite, Persil, Ben & Jerry's ice cream (oh no!), Flora, Pot Noodle, and many more.

Tesco shortage

BBC presenter tweets:

It's not only sterling that is moving...

'Disgraceful and patronising'

A Lloyds high street bank
Reuters

Broker Hargreaves Lansdown has written to the government to protest about the potential exclusion of retail investors from the sale of its remaining stake in Lloyds Banking Group.

UK Financial Investments Limited, which manages the government's stake in the bailed-out bank, said on Friday it would look at selling stock to institutional investors over the next 12 months. 

But it recommended scrapping plans to sell off some shares via a discounted offer to the general public, a decision Hargreaves said risked disappointing thousands of small investors hoping to cash in on growth at Britain's biggest mortgage lender.

Ian Gorham, Hargreaves' chief executive, says: “We urge the government that a rethink would be a victory for common sense. Money from taxpaying working people bailed out Lloyds Plc. Not giving them the opportunity to participate in its sale is disgraceful and patronising.”

Will Treasury share forecasts before Brexit talks begin?

Permanent secretary appears before Treasury Committee

Tom Scholar
Parliament

Rachel Reeves, former shadow secretary of state for work and pensions, has asked the Treasury’s top civil servant if he will publish analysis on the potential economic impact of the government’s Brexit negotiating position before it triggers Article 50.

In short, Mr Scholar said, it is not his call.

“We are some way away from defining that [negotiating] position… but at that time it will be for the prime minister to decide on what basis parliament is engaged and on the basis of what information. We will certainly be ready to do any analysis that we are asked to do.”

Economic uncertainties

Permanent secretary appears before Treasury Committee

Treasury mandarin Tom Scholar was asked about scrapping former Chancellor George Osborne's fiscal targets to get the economy on track. He accepts that the referendum result changes all this, given the economic uncertainties over Brexit terms.

Mr Scholar says: "The judgment taken - and our advice endorses this - is that given we are expecting a period of uncertainty, to put it no more strongly than that, it would not be sensible to take now the tightening measures that would be implied in order to get the fiscal position onto the same path that was projected six months or 12 months ago." 

FTSE pauses for breath

The FTSE 100 retreated on Wednesday after having nudged an all-time high in the previous trading session. The blue-chip index fell 0.7% to close at 7,024.01 points. The FTSE 250 mid-cap index fell 0.65%, but also remained near record highs reached this month. 

Glencore was the FTSE 100's stand-out gainer, rising 6.4%.

On the currency markets, sterling has eased back from earlier gains, but was still 0.68% up against the dollar at $1.22 and up 0.98% against the euro at €1.10.

Office for Budget Responsibility to detail Brexit investment delay

Treasury permanent secretary Tom Scholar before select committee

Brexit: 'Starting with a fresh sheet of paper'

Treasury permanent secretary at Parliament's Treasury Committee

The Treasury looks to be starting afresh on analysis of the UK's relationship with the EU after Brexit. 

There was a lot of work on three alternatives to EU membership prior to June's referendum, but those off-the-peg models no longer apply, according to the Treasury's most senior official.

Tom Scholar told the Treasury Committee: "I think the analysis the Treasury produced at that time looked at three stylised alternatives to EU membership based on existing models that you can observe applying to other countries.

"That was before the referendum and before any thought had been given to the sort relationship we would be trying to achieve.

"The Prime Minister has been clear she doesn't think an off-the-peg option - one of those three stylised options - is right for the UK. What we should be doing is starting with a fresh sheet of paper and building the relationship that works best for us.

"The analysis that was done there - while it's useful and is a good framework for thinking about the issues - is not directly applicable to the issue we are now looking at, which is what model do we want and how will we achieve it."

Treasury losing influence? 'No'

Tom Scholar appears before Treasury Committee

Treasury mandarin says protecting financial services a 'high priority'

Tom Scholar
BBC

The UK's financial services sector will be a "high priority" for the government when it negotiates Brexit terms with the EU, the most senior Treasury official says.

"The UK economy and UK exports are quite services-heavy, and financial services are an important part of that. So I think we will be very keen indeed to make sure the final agreement gives the proper place to financial services within that," Tom Scholar, permanent secretary at the Treasury says.

"So, it will have a high priority in our discussions," he told the Treasury Committee this afternoon.

Top bankers warned yesterday that they could start moving staff abroad as early as next year if there is no clarity on Britain's access to the European single market once it leaves the EU. 

Work experience? Or just plain work?

Entertainment mag Heat and its publisher Bauer have raised hackles at the Graduate Fog website, which campaigns to ensure people get a fair deal in the jobs market.

An advert for a work experience placement offering "expenses up to £10 per day" sounds too much like an internship, the site says. 

It's difficult to know where to draw the line between work experience and internships. 

But Graduate Fog says: "Applicants [for the job] must be aged 18 or over, and are expected to undertake numerous essential tasks, including unpacking and returning clothing samples, and researching pricing information. Is it really “work experience” – or just work? And shouldn’t it be paid?"

In response, GoThinkBig, the site on which the advert was placed, says it's a great chance to learn and shadow the Heat team.

Tweets
BBC

Sterling's graphic fall

Wall Street opens down

Wall Street has opened lower, with traders saying investors are exercising caution about the rising dollar and higher US bond yields.

The Dow Jones is off 0.2% at 18,095.58, while the broader S&P 500 shed 0.1% to 2,134.32. The tech-rich Nasdaq lost 0.3% to 5,232.97.

A stand-out gainer, however, was Apple, which jumped another 1% on speculation it would be a big beneficiary of Samsung's Note 7 woes.  

Why Saudi needs to raise money

Saudi Riyal banknotes
Reuters

Anyone interested in understanding Saudi Arabia's deteriorating finances might want to take a look at this piece on Bloomberg's website.

With Saudi officials meeting investors today ahead of its first sale of international bonds, the kingdom has released some economic info. Saudi certainly needs to raise some money, hence the pending flotation of its state oil company.

In short, says Bloomberg, oil income has tumbled about 70% in five years, and capital expenditure has been cut also by 70% this year.

Meanwhile, government debt has ballooned and Saudi's budget shortfall is now the largest among the world's 20 biggest economies.

Oil inventories 'near all-time highs' - Opec

Oil pump
AP

Oil cartel Opec says production increased in September, highlighting the challenge it faces in seeking to cut supplies for the first time since 2008. 

The Organisation of the Petroleum Exporting Countries pumped an extra 220,000 barrels per day (bpd) to reach 33.4 million bpd last month. 

The group voted for the first production cut in eight years at informal talks in late September and will thrash out the finer details next month.

"Inventories stand near all-time highs worldwide," Opec said in its latest monthly report. "Although in recent weeks these high levels have been slightly drawn down." 

Will robots rob us of jobs?

Bank of England tweets

Bangladeshi bank fined £3.25m

Sonali Bank website
Sonali Bank

The UK operations of Bangladesh's biggest bank has been fined more than £3.25m for "serious and systemic" anti-money laundering failures. 

The Financial Conduct Authority said it had also banned Sonali Bank UK from taking deposits from new customers for 168 days.

Sonali is the only UK-based Bangladeshi bank and had 85,625 customers registered to send money overseas in 2014. It has around 2,500 customer accounts in Britain and offices in London, Birmingham and Bradford. 

Administrative costs

BBC business presenter Adam Parsons tweets:

View more on twitter

Weaker pound: More negative than positive?

Pound coins and £10 notes
Press Association

More on the impact of the weaker pound on the UK economy - this time in an analysis from Berenberg's senior UK economist Kallum Pickering. 

He points out that sterling has depreciated by 21% on a trade-weighted basis since it peaked last November - and is down by nearly 16% since the Brexit vote. 

To put that into perspective, he says, the decline was almost 30% in 2007/08 during the global financial crisis, and almost 20% in 1992 when the UK crashed out of the Exchange Rate Mechanism.

He says the benefits of a weaker pound includes that it will help to shrink the UK's current account deficit. The risks are it'll lead to lower investment and consumers buying less because import prices will rise. He concludes:

The key message is that, overall, any positives that come from the weaker sterling are outweighed by the long-term risks underpinning its depreciation. Brexit risks will dominate the outlook for sterling for at least two years – or until the UK finally exits the EU. Any rebound in sterling should be viewed positively as it would probably indicate a better expected outcome for Brexit.

Kallum PickeringSenior UK Economist, Berenberg

FTSE makes back ground

Nickel operations
Glencore

Quick update on the FTSE 100 - it's now down only 9 points today at 7,062. 

Miners are helping to boost the index, with Glencore up 4% and Anglo American gaining 1.3%.

Swiss commodities trader Glencore said earlier it's seeing resurgent coal demand in Asia and is seeking to increase oil trading with Libya, Iran and Iraq.

UK-facing stocks lag international FTSE peers

The FTSE 100 hit record mid-session highs yesterday, but it's not good news for all UK-listed stocks. 

Bloomberg reports that an index of companies that get most of their sales from the UK is poised for its biggest annual drop since the global financial crisis. 

The FTSE Local United Kingdom Index (the white line in the chart underneath) fell to a two-month low this week and remains below its level on the day of the referendum.  

It includes the likes of Lloyds bank and housebuilder Taylor Wimpey. 

View more on twitter

'UK should be generous to EU over trade'

John Redwood
Getty Images

Trade is also uppermost in the mind of pro-Brexit campaigner John Redwood. 

He's written in Prospect Magazine that the UK's leave negotiations with the EU should centre on trade arrangements.

"The UK should be generous and offer the rest of the EU tariff-free trade with no new barriers on service trade either, carrying on exactly as we do at the moment," he says. 

"That would be the best for both sides, especially for them as they sell us so much more than we sell onto the continent. If they want barriers, then we will have to revert to the WTO Most Favoured Nation tariff, which averages around 3.5% but helps us more than them as more of our trade will be tariff free," he adds.